JPMorgan's latest report shows that the global electric vehicle market continued its growth trajectory in August 2025, with penetration rates rising across all three core markets - Europe, the US, and China. However, influenced by policy changes and subsidy adjustments, regional markets exhibited differentiated characteristics, while competition patterns among leading automakers and battery companies saw new developments.

**Global EV Market: Sales and Penetration Rates Both Rise with Clear Regional Differentiation**

Data indicates that combined EV sales across the three major markets - Europe's Big Five (Germany, France, UK, Italy, Spain), the US, and China - reached 1.39 million units, up 10% year-over-year and 5% month-over-month. Overall penetration rate improved to 35%, gaining 2 percentage points both year-over-year and month-over-month, with all three regions achieving positive growth.

By region, Europe's Big Five achieved an EV penetration rate of 27.1% in August, approaching the historical peak of 27.7% from August 2023. The UK showed the most impressive performance with a 4.6 percentage point month-over-month increase in penetration rate, followed by France (+2.0 percentage points) and Germany (+1.9 percentage points), while Italy and Spain experienced month-over-month declines.

JPMorgan analysts noted that the UK's growth benefited from its "Electric Vehicle Subsidy Program" - small economy vehicles priced at €37,000 or below are eligible for subsidies. The UK is expected to continue leading EU EV penetration rate growth for the remainder of this year. Additionally, except for Mercedes-Benz (MBGYY.US), all European automakers are on track to meet 2025-2027 EU emission standards, with supply-side strategies from manufacturers set to further drive EU EV market expansion.

The US saw EV penetration rate climb modestly to 12.1% in August, with pure electric vehicles surpassing 10% for the first time. This growth closely relates to the phase-out of the $7,500 tax credit policy in October, as automakers significantly increased subsidies to clear inventory before the policy expires. Excluding Tesla (TSLA.US), mainstream EV brands' industry subsidies increased 6% month-over-month, while Tesla's subsidies declined 24% month-over-month.

However, JPMorgan warns that with subsidy policies formally expiring in October, US EV sales are expected to slow in Q4. From a market share perspective, Tesla remains first with 37% market share but saw its share decline; General Motors (GM.US) (second place, 14%) maintained its share, while Hyundai Motor (third place, 11%) and Ford (F.US) (fourth place, 7%) achieved month-over-month share gains.

China's August EV retail sales reached 1.08 million units, up 5% year-over-year and 9% month-over-month. Among total passenger car retail sales of 1.95 million units nationwide, EV penetration rate further improved to 55%. JPMorgan stated that new model launches and price wars remain the primary drivers of sales growth.

Data shows China's top 10 EV manufacturers delivered a combined 825,000 units in August, up 11% both year-over-year and month-over-month, accounting for 76% of national EV retail sales. BYD COMPANY (01211), GEELY AUTO (00175), and Tesla maintained the top three positions with a combined market share of 55%, while NIO achieved 49% month-over-month sales growth driven by new model launches.

**Battery and Materials Segment: China's Anti-Involution Policy Boosts Supply Chain**

Over the past month, China's EV supply chain index rose 20%, significantly outperforming Japan (+6%) and South Korea (-7%), primarily benefiting from China's anti-involution policies. By segment, all industries performed strongly, with electrolyte leading growth (+22%), followed by separators (+15%), battery manufacturers (+11%), cathode materials (+10%), and anode materials (+10%). Battery material stocks also outperformed battery stocks, mainly driven by better-than-expected price increases led by Chinese companies and government anti-involution policies.

For upstream battery metals, lithium carbonate/lithium hydroxide prices hover around $10/kg, but upside potential remains limited due to continued oversupply and high inventory levels.

JPMorgan stated that China's anti-involution policy has significantly impacted the industry, promoting capacity rationalization, curbing dumping, and driving a more sustainable industry landscape. Without mandatory government measures, the bank believes its price impact will depend on supply-demand dynamics and market coordination in each segment. However, during closed-door anti-involution meetings, all companies were required to limit capacity expansion, with prices in many segments expected to stabilize or recover in 2026, representing a positive signal for Chinese battery material suppliers' pricing power.

**Key Event: Hyundai-LG US Plant Raid Has Limited Impact**

On September 4, US immigration authorities conducted a surprise inspection of the Hyundai-LG Energy Solution Georgia battery plant regarding visa compliance issues. However, JPMorgan believes the plant isn't expected to begin production until late 2027, so the event has limited fundamental impact on Hyundai, Kia, and LG Energy Solution.

While tightening US labor markets and stricter work permit regulations may challenge Korean battery companies' US operations, the bank believes LG Energy Solution's first-mover advantage in the US market and South Korea's critical role in the global battery supply chain will continue supporting its strong position in US EV and energy storage system markets.

**Investment Recommendations: Bullish on Chinese and Korean Automakers and Battery Leaders**

JPMorgan stated that despite regional EV sales growth in August, US terminal demand may weaken in Q4 due to negative impacts from EV subsidy phase-outs. The industry's next major catalyst will be further progress in China's anti-involution policies, which could further alleviate concerns about unrestrained price competition.

In South Korea, the bank favors Hyundai and Kia automakers due to profit resilience from rising hybrid vehicle ratios. In the battery segment, it maintains an overweight rating on LG Energy Solution while staying neutral on SDI. For materials, it recommends LG Chem and L&F (overweight) while maintaining underweight ratings on Ecopro BM and POSCO Future M.

In China, the bank is bullish on BYD COMPANY's overseas business prospects and CATL due to its technological leadership and stable profitability, though it assigns a "neutral" rating to CATL's Hong Kong shares due to valuation considerations.